BILL ANALYSIS
AB 493
Page 1
ASSEMBLY THIRD READING
AB 493 (Ruskin)
As Amended June 1, 2007
Majority vote
TRANSPORTATION 8-6 APPROPRIATIONS 12-5
-----------------------------------------------------------------
|Ayes:|Nava, Carter, DeSaulnier, |Ayes:|Leno, Caballero, Davis, |
| |Karnette, Portantino, | |DeSaulnier, Huffman, |
| |Ruskin, Solorio, Lieber | |Karnette, Krekorian, |
| | | |Lieu, Ma, Nava, Solorio, |
| | | |Feuer |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Duvall, Galgiani, |Nays:|Walters, Emmerson, La |
| |Garrick, Horton, Houston, | |Malfa, Nakanishi, Sharon |
| |Huff | |Runner |
| | | | |
-----------------------------------------------------------------
SUMMARY : Establishes the Clean Vehicle Incentive Program
(Program) as administered by the California Air Resources Board
(ARB). Specifically, this bill :
1)Makes findings and declarations relative to greenhouse gas
emissions in California and how rebates and surcharges on the
purchase of new motor vehicles, specifically light- and
medium-duty passenger vehicles with a gross vehicle weight
rating of 10,000 pounds or less, could ultimately lead to the
purchase of cleaner vehicles as well as encourage
manufacturers to offer more low-emitting vehicles to
California consumers.
2)States legislative intent to establish a market-based Program
of one-time rebates, surcharges, or neither (zero-band) on the
purchase of new vehicles. Also, the Program is to be
self-financing and not increase expenditures from or reduce
revenues in the state General Fund (GF).
3)Provides definitions to the following terms: carbon dioxide
equivalent, criteria air pollutants, emergency vehicle,
greenhouse gases factor, greenhouse gases, motor vehicle,
vehicle, program, and zero-band.
AB 493
Page 2
4)Requires a purchaser of a new motor vehicle eligible for a
rebate, to file a claim with the automobile dealer, who will
submit the rebate claim to the State Board of Equalization
(BOE).
5)Requires BOE to pay the rebate through electronic funds
transfer if so requested by the new vehicle purchaser.
Stipulates that no interest is to be paid on the rebate.
Requires BOE to make every reasonable effort to pay rebate
claims within 60 days of request.
6)Requires that dealers collect the surcharges from the new
motor vehicle purchaser and to submit the surcharge to BOE.
7)Requires ARB, no later than July 1, 2009, in consultation with
other agencies as appropriate, subsequent to at least two
public workshops, to develop regulations to implement the
Program. Requires that the regulations establish a schedule
of rebates and surcharges to take effect July 1, 2010, and
applies to motor vehicles beginning with the 2011 model year.
Requires that the schedule of rebates and surcharges to be
adjusted annually and take effect on January 1 of each
subsequent year, as applied to new vehicles of that model
year.
8)Requires ARB to calculate, using a linear scale, the rebate or
surcharge based on the vehicle's emissions of greenhouse
gases, compared to the emissions of all vehicles of the same
model year that are subject to the Program. Allows for
adjustments to the calculations based upon emissions of
contributory pollutants and emissions of criteria air
pollutants.
9)Requires the establishment of a zero-band that reflects 20-25%
of a fleet of a given model that will neither receive a rebate
nor a surcharge. The zero-band is to be adjusted to ensure
that buyers have a variety of vehicles among various types,
including light trucks, that are not assessed a surcharge.
Requires ARB to consider sales-weighted data in determining
the placement of the zero-band.
10)Establishes maximum amounts of the rebates and surcharges to
be not less than $2,250 or more than $2,500. No surcharge is
to exceed the amount of the sales tax on the vehicle purchase
AB 493
Page 3
price.
11)Establishes a minimum limit on the surcharge or rebate at
$100. Any vehicle with an estimated surcharge or rebate of
less than $100 is to be placed in the zero-band.
12)Requires ARB to make annual adjustments to the applied
rebates and surcharges that will ensure that the surcharges
are sufficient to cover the cost of implementing the Program,
including administrative costs incurred by any state agency.
Requires, a reserve of 15% of the estimated rebates.
13)Authorizes the Department of Finance (DOF) to direct ARB to
adjust the schedule of rebates and surcharges to maintain an
adequate balance in the Clean Vehicle Incentive Account
(Account) and requires ARB to make any adjustments to the
schedule as directed.
14)Restricts adjustments to the schedule of rebates and
surcharges no more than once per model year.
15)Authorizes ARB, in consultation with BOE, to delay the first
year of Program implementation by enacting the rebate portion
of the Program up to 60 days after the surcharge element of
the Program is implemented.
16)Requires that the rebate or surcharge apply at the point of
sale at the price of the vehicle after the relevant taxes are
applied, not including the addition of sales taxes.
17) Establishes surcharge requirements for persons purchasing a
vehicle outside of the state. Requires ARB, BOE, and the
Department of Motor Vehicles (DMV) to cooperate to develop
procedures for out-of-state purchases. Establishes that a
person purchasing a vehicle outside the state is not eligible
for a rebate.
18)Applies Program requirements upon eligible vehicles leased
for more than one year, as specified.
19)Requires BOE to collect the surcharges and to pay all rebates
and refunds of surcharges.
20)Requires ARB, by May 10, 2010, to communicate with the
AB 493
Page 4
public, including information to be posted on its Web site,
the surcharges and rebates on vehicles in the Program.
Requires ARB to provide information to licensed automobile
dealers and consumers on relevant details of the Program.
Authorizes ARB to modify information on the Program on air
pollution labels that are displayed on new vehicles. Requires
automobile dealers to clearly display the amount of the
surcharge or rebate on vehicles available for sale. Requires
ARB to incorporate a public education campaign as described.
21)Establishes surcharge exemptions for:
a) Emergency vehicles purchased by any local agency;
b) Vehicles purchased by microbusinesses for work-related
purposes;
c) Paratransit and other vehicles used to transport persons
with disabilities;
d) Vans purchased for the purpose of vanpooling; and,
e) Vehicles purchased by very low income residents of the
state, as defined by BOE.
22)Exempts diesel powered vehicles from the provisions of this
bill.
23)Provides recourse to a purchaser who believes the vehicle
should be exempt from the Program. Requires BOE to make
available to automobile dealers and vehicle purchasers
applications for purchasers seeking reimbursement from the
surcharge.
24)Establishes the Account administered by ARB, in consultation
with BOE, and directs that surcharges collected be deposited
into the Account. Authorizes moneys in the Account to be
continuously appropriated without regard to fiscal year.
Authorizes payments from the Account for rebates, refunds, and
reimbursement of costs to BOE, ARB, State Controller's Office,
and DMV.
25)Authorizes DOF to transfer $1.5 million from the Vehicle
Inspection and Repair Fund (Repair Fund), into the Account,
AB 493
Page 5
for initial Program startup. Requires that any loan from the
Repair Fund is repaid with interest from the Account by June
30, 2011.
26)Authorizes ARB to collect information from motor vehicle
manufacturers to calculate a vehicle's emissions of greenhouse
gases.
27)Requires ARB to determine how to account for alternative
fueled vehicles in the surcharge and rebate calculations.
Authorizes ARB to develop procedures for surcharge refunds if
an approved alternative fuel conversion device is installed on
the vehicle within six months of purchase.
28)Requires ARB to consider "upstream emissions" or emissions of
global warming gases that occur during the extraction,
refining, transport, and local distribution of motor vehicle
fuels, in the promulgation of implementing regulations.
29)Requires ARB, in consultation with BOE, to submit a report to
the Legislature no later than January 1, 2013, and every three
years thereafter, on the following:
a) Describes the Program's effectiveness;
b) Identifies any adjustments made to the schedule of
rebates and surcharges and the reasons for the adjustments;
and,
c) Recommends any changes needed to enhance the Program.
EXISTING LAW :
1)Assigns responsibility for regulating vehicular emissions to
ARB and authorizes it to adopt and implement motor vehicle
emission standards and specifications.
2)Requires ARB to regulate greenhouse gas emissions emitted by
passenger vehicles and light-duty trucks to achieve maximum
feasible reductions. Requires ARB, not later than July 1,
2007, to rename labels for model year 2009 and subsequent
model year motor vehicles, information on the emissions of
global warming gases.
AB 493
Page 6
3)Requires ARB, on or before July 1, 2007, to adopt a list of
discrete early action emission reduction measures that can be
achieved prior to the adoption of market-based compliance
mechanisms and other measures and limits under the provisions
of AB 32 (Nunez and Pavley), Chapter 488, Statutes of 2006.
Requires ARB, on or before January 1, 2010, to adopt and
enforce those measures on the adopted list.
4)Authorizes the DMV to register vehicles and license drivers in
the state.
5)Establishes and charges the BOE with tax administration and
fee collection in the state. The areas of authority of BOE
fall into four broad areas: sales and use taxes, property
taxes, special taxes, and acting as an appellate body for
franchise and income tax appeals (which are collected by the
Franchise Tax Board).
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Moderate one-time GF costs, about $150,000 in 2007-08 and
$700,000 in 2008-09, to ARB to develop Program regulations and
to establish the process for imposing and refunding surcharges
and paying rebates. These costs are not covered by revenue
generated by surcharges because they would not yet be in
place. DOF would be authorized to loan up to $1.5 million
from the Repair Fund to the Account for Program
implementation.
2)Moderate ongoing costs, about $180,000 annually starting
2009-10, to ARB to administer the Program, adjust the schedule
of rebates and surcharges to reflect changes in the relative
emissions among all makes and models of new motor vehicles,
and to process buyer claims related to surcharges.
3)Moderate one-time costs, about $1.5 million in 2009-10, to BOE
to develop the process for collecting surcharges from
dealers, depositing this revenue into the Account, and making
rebate payments from the Account.
4)Substantial ongoing costs, about $1 million starting in
2010-11, to BOE to collect surcharge revenue from dealers,
make rebate payments, and maintain the 15% reserve in the
AB 493
Page 7
Account.
5)Minor ongoing costs, perhaps $130,000 annually starting
2010-11, to DMV to collect and process surcharges paid by
persons who purchased their vehicles out-of-state and brought
them into California for use.
6)Substantial revenues, up to $660 million in 2010-11 and $880
million annually thereafter, to the Account generated by
surcharges imposed on some new car buyers. This revenue is
lower in 2010-11 because less than one year's worth of revenue
will be received by BOE within the first fiscal year.
7)Substantial payments, up to $513 million in 2010-11 and $555
million annually thereafter, from the Account to make rebate
payments and surcharge refunds.
COMMENTS :
1)According to the sponsor, the Union of Concerned Scientists,
they are seeking to establish a program that reduces vehicle
emissions while protecting consumer choice. Thus, they
envision funding an incentive for buying clean and efficient
vehicles by imposing a surcharge on dirtier, less efficient
ones. They indicate that "Transportation is by far the
largest source of global warming pollution in California,
accounting for more than 40% of the state's heat-trapping
emissions. There are over 20 million passenger vehicles on
the road in California, and approximately 1.7 million new
passenger cars and light-duty trucks are purchased each year.
Even with existing vehicle regulations, the bulk of global
warming emissions in California are expected to continue to
come from cars and trucks."
The sponsor further indicates that "Californians have
demonstrated widespread and consistent enthusiasm for clean
vehicle solutions, such as the Clean Car Discount program, to
reduce global warming pollution. According to a 2006 poll,
82% of California voters support giving rebates for the
purchase of clean vehicles and 62% support placing a one-time
surcharge on high-polluting new vehicles. Overall, 60% of
registered voters support the Clean Car Discount program, with
an overwhelming majority from every region, income level, and
political affiliation indicating support."
AB 493
Page 8
2)Also, as indicated on the ARB Web site, there are a number of
existing government and private programs that provide monetary
incentives to enhance the marketability of cleaner vehicles.
This bill would lead toward the establishment of another
incentive program.
3)Writing in opposition, the California Motor Car Dealers
Association indicates that "new vehicles offered for sale in
California are the cleanest in the world and achieve better
fuel economy than most used vehicles? Slapping a surcharge on
new trucks and Sport Utility Vehicles (SUVs) that are
currently required under federal law to meet Corporate Average
Fuel Economy (CAFE) standards of 22.2 miles per gallon, will
encourage consumers to buy or continue driving used vehicles
that emit higher amounts of greenhouse gas. A $2,500
surcharge on a new 2011 model year SUV will act as a huge
incentive to buy a used 2010 or older model of the same
vehicle." The association further states that "this bill
would hit low and middle income Californians the hardest. It
is a regressive tax that discriminates."
The Alliance of Automobile Manufacturers indicates that "this
bill is profoundly unfair. Audaciously, it exempts the State
(and others) from the surcharge imposed on California
consumers. However, no allowance is made for small business
people, large families, or other Californians who may require
larger vehicles. As importantly, there is no recognition that
a large vehicle may be driven very few miles while a smaller
vehicle may be driven very many miles. There is no effort to
correlate actual emissions with the surcharge or rebates."
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093
FN: 0001268